Life Insurance: Regulatory Recap

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Life Insurance: Regulatory Recap

Equity Research

Industry Update — June 24, 2026

Life Insurance

At Long Last...New CLO RBC Factors

Our Call Wes Carmichael, CFA

The NAIC adopted new C-1 factors for CLOs, a source of concern for higher capital Equity Analyst | Wells Fargo Securities, LLC

Wesley.C.Carmichael@wellsfargo.com | 212-214-5335

requirements for LifeCos. However, our math suggests our coverage could see a neutral

Elizabeth Zhou, CFAimpact/benefit; other carriers with BIG CLO exposure could see a negative impact.

Associate Equity Analyst | Wells Fargo Securities, LLC

Elizabeth.Zhou@wellsfargo.com | 212-214-5330

A (potential) modest positive for RBC ratios for our coverage. We think there could

be more material negative impacts for carriers that have higher exposure to CLOs, The newly adopted NAIC C-1 factors haveparticularly if there is exposure to BBB+ and below tranches (minimal for our coverage). In been in the works for quite some time, and

Exhibit 1, we show the median impact for our coverage would be an increase of +1bp for while future adjustments could be made, the

YE'25 RBC ratios before adjusting for funds withheld reinsurance (PFG closer 0pts, net). industry impact seems relatively benign.Overall, factor changes may be a modest positive for our coverage.

Industry comment letters pushed for middle

However, C-1 factors to scope in MM/other CLOs (not just BSL). Several comment market CLOs and other structures (vs. BSL

letters suggested new factors should only apply to BSL CLOs (used to develop the model CLOs) to be excluded from C-1 changes

driving the factors). However, regulators decided that for YE'26, middle market CLOs, this year, but the NAIC working group will

CBOs, CDOs, and other similar instruments will also receive updated C-1 factors.